AFM373 Lecture Notes - Lecture 5: Financial Services, Capital Structure, Net Present Value

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Request: provide guidance on company"s financial strategy, assess firm"s overall debt policy (appropriate mix of debt/equity) What does the company do: largest printer of paper checks in the us. Retired all of it"s long term debt, haven"t issued major bond in more than 10 years. Company has been pursuing aggressive program of share repurchases. Stock has been at its highest in 10 years. Dominant player in very concentrated (49%), competitive check-printing industry. Sales and earnings growth was on a decline fight against technological change (online payment methods, popularity of credit and debit cards) by: reducing labor force (15k to 7k) Getting rid of noncore businesses (~20 businesses) Need financial flexibility to deal with disintegration of core business. 1975 1995 (peak cheque usage): revenues grew at compound annual rate of 12%, has declined since. Competitors: john harland (25%) and clarke american (26%) Annual decline 1-3% in check demand (expect to continue)

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